THE FINANCIAL DEBATE

New Zealand Times, Volume XLVI, Issue 10659, 4 August 1920, Page 6

THE FINANCIAL DEBATE

SOME GANOID CRITICISM IN THE HOUSE

" A DESPONDENT AND VISIONLESS BUDGET"

GRAVE OMISSIONS: NEW ZEALAND'S " NAVY "

On tho House of Representatives re* suming after tho dinner adjournment last night the Prime Minister moved that the House do ro into Committee of Supply, thus opening the way for the debate on the .Financial Statement.

.£6 17s 6d. Then we had to add freight, refining, and bagging. Would anyone tell him that that cost .£4O a ton? Mr Massey. What has that to do with it? . Mr Wilford: Everything: It was no use anyone saying we should pay this price because other countries wore. A bargain had been made with someone for sugar, and it was being sold hero to-day at 6id per lb. AVho did it? STATE BANK URGED. "SOOTHING SYRUP AND EYEWASH." , Dealing with the State Bank question, Mr Wilford stated that it had been shown that there was no chance of a private member getting through a State Bank Bill while tho present (Party was in power. (Hear, hear.) Mr Massey: No; I am not foolish enough for that. Mr Wilford: I am quite willing to admit that the right hon. gertleman is the whole party, and the rest were the atmosphere. (Laughter.) Ho had got the right hon. gentleman's word that he would not allow it; and, if the people of this country waited until tho Priino Minister himself introduced a Stato Bank measure they would have to wait a long time. He believed, however, that a State Bank would come in this country, though not while the right hon. gentleman held the reinß. (Hear, hear.) Ths closest corporation and* trust in (he country was that of tho banks. A Reform member: That of the lawyers. (Laughter.) , He knew, said Mr Wilford, that "the Finance Minister had to look to the banks for money for his loans, etc., and that ho had to take the soothing syrup they put into his ear or the eye-wash they eent him. (Laughter) Under present conditions half-a-dozen bank managers could meet and fix the rates for money in tho Dominion and settle the affairs of every business-man in tho country. As a junior partner in a bank the Government had very littla influence. It had been unable to prevent tho Bank of New Zealand sending twenty millions of its money to London, wheroas tho. Bank of New South Wales, with eeventyfivo millions -*■ against tho Bank of New Zealand's fifty-three millions, only thought it necessary to keep six millions in London. Ho womdered what the Bank of New Zealand Bill was going to contain. Would the measure allow the bank to water its 6tock, doubling the amount of share*, so aa to cut down nominally by one-half tho 17i (per cent, dividend paid? The Prime Minister refused to say; but Mr Wilford predicted that he would "draw" him on the subject llatoii (Laughter.) He contended that if the Government took over tho bank ~it would do more than anything else to put a stop to wild-cat speculations and bring matters down to bedrock. At present a wealthy man could deposit his securities and get money for any venture be liked. But a time was coming, as it had already come in Great Britain and America when the banks were going to bo required to stop providing!money for wildcat speculations and keep it for l«giti« mate business cnly. (Hear, hear.) Mr Massey: Wo have got cheaper money here than they have in Austvalis with their Stato Bank. (Hear ; hear.)

The debate was opened by Mr T. M. Wilford (Hutt), who expressed regret that the Hon. W. D. S. MacUonald (Leader of tho Opposition) was unable, owing to illness, to bo present and tako bis place in the debate. Mr Willord said that ho felt that at such a time every member who took part in the discussion should speak under a sense ot responsibility, inasmuch as it might have no little influence on the financial and economic future of the Dominion. His aim, therefore, would be constructive, especially in regard to the matters which had not found mention* in the Finance Minister's statement. The Budget. 1-e held, was a despondent one, a Budget without vision. It set out quite clearly tho financial condition cf the country, but it held out very little hope to the majority- of the people for the alleviution of the conditions under which they were at present suffering. He regretted that many of tho matters near to the heart of everybody had been either slurred over, very lightly touched upon, or left altogether out. He proposed, therefore, to speak that night on many subjects which the Government had lightly skimmed over, and make suggestions fs to how matters might be improved in various directions. He regretted that there was nothing in the Budget to show that the Government realised that the country must not only be great in production, but methods and arrangements must be mad© by which our products could best be marketed. It was no use any countrv calling for more production unless it 'had with that production markets. The two must go together. One of the most important omissions from tho Budget' was tine lack of any suggestion or heln to our farmers wuu regard to shipping. Everybody in the country knew that while shipping to-day was dominated and to a certain extent, the tim* was coming when the control would he lifted, ond this country, as was the case with many other countries, would Tie left to tne sweet will of the combines and trusts in the shipping world, without any method or clear plan or scheme for meeting tho trouble that must arise. NO HELPFUL SUGGESTIONS. He had thought that there would hava been some indication in the Budget as to what the Government proposed should be done when the shipping controll was" lifted; but there was an entire absence of helpful suggestions on that head, lie hoped that what Lord Inchcape had said about what might happen when tho control ceased might yet act as a warning to the Prime Minister,, and lead him to very seriously consider this question. Further, what had been done by the Government, not only to provide markets but to supply New Zealand with commercial agents in countries with which we proposed to do business, so that the best method might be arrived at of placing our products on those markets which might be open to them in tho years to come? There was nothing e<nstructive on such lines, nor on other lines, for niacins the country's produce either in "the United States, in : tho Argentine, or in South America generally. This, in spite of the fact that it had been shown that North and South America both ottered a promising market for our meat, onr fruit, and other products. We ought, he contended, to have agents over there to look after the interests of our producers. It behoved Americans and Britons to get together to see if thev could not produce a better understanding. • I THE DEBT QUESTION.

Mr Wilford : What has that got to do with what lam saying? (Laughter.) Mr Massey t Everything! (Laughter.)

Mr Wilford said that ho must have wasted his time, bo far as the Prima Minister was concerned, if he did not understand him better than that. (Hear, hear.) Mr Massey: It ia very difficult to male you understand anything. (Laughter.) Mr Wilford: 1 agree that it is verj difficult for yon to make mo understand anything. (LaugHter.) "PRIME MINISTER'S NAV.Y.CHATHAM ALREADY* OBSOLETE. Referring to the "Prime Minister'* Navy, H.M.S. Chatham," Mr Wilford said that the right. ■ hon gentleman estimated that the cost would he .£'250,000 a year; but, as we should cease to pay tho JEIOO.OOO subsidy to tho British Navy the net ooet would be only .£150,000 a year—a truly wonderful bit of financing. (Laughter.) Ho maintained that wn would nevsr be able to man such ships from this country, and that the oniy naval defence that this country would stand for was submarines, with a base, say. at Queen Charlotte Sound, and with hydroplano "spotters." Tho Chatham, he held, was already obsolete ir. speed and armament, with its 25 to 2fl knots only, as compared with the 30 knots <>f th» Tennessee, the- latest addition to the American cruiser forco. Dki not the right hon gentleman know, lo asked, that it was impossible to adequately man any navy in the world today !

Speaking of debt, Mr Wilford said that Japan had a debt of .£1.6 per head. England .£157, and New Zealand .£2OO. New Zealand's was a big burden, and it had to be realised that the revenue from all sources only reached .£26.000,000, while the expenditure for the same period was sot down at #23.000,000. Great Britain's national wealth was .£16,000,000,000, half of which was pledged. There was an overflowing of paper money in the country, a consequent decrease in the value of money or an increase in i the value of products. It would be asked what that had to do with us. Well, if we were not: able to be sufficiently self-reliant to find the • money for our public works, to pay the increases to our civil servants, etc., we would have to go on the Homo market, which was unable to pay its way to-day in cash. Whereas tho relation of pledge to debt in England was 50 per cent., in New Zealand the 50 per cent, relationship was not to the public but to the private wealth. The private wealth of New Zealand was .£400,000,000. and the debt of the country was .£201,000,000. Were we going to go along like this, or were we going to make some levy on wealth ? Ho mentioned Lord Buclnnaeter's schema to set one-tenth, of certain wealth free of interest for fourteen years. Jlo did not believo there was a man .in this country who was worth .£IO,OOO who should not bo willing to hand over one-tenth to tho State for fourteen years. Some such scheme would appreciably reduce New Zealand's | de *" TAX THE WEALTHY.

Mr Massey: I could man a ship from (he native race only.

Mr Wilford: Yes; and you told us you coiild run tho whole country with six private secretaries. (Laughter.) I have no doubt tho right hon. gentleman could man a ship by himself. (Laughter.) Ho could be bo'sun, crew, ship's cook, doctor, nnd everything there is. (Laughl tor.) In America, he added, tho desertions from tho Navy averaged 700 a month.

It was up to the Government here to see that tho large estates bore an increased graduation. He made the same suggestion in regard to income tax. Taxation should bo put upon those best able to bca.r it—the large landholders, and so on. The great difference between the Liberals and the Reformers was that a Liberal stood for an increased graduation of income tax, land tax, and death duties. It was no use boasting that we took £-4,830,000 from • our Customs, as it showed a want of constructive policy. It came about because duty was payable on the value of tho goods, and tho goods had gone up 40(1 per cent, in some instances. With a Government of vision a Customs Bill could have been introduced this yea* by calling the House together in Februai"y - SUGAR.

Mr Massey: You don't need to go to America to teach us anything about inananging a navy. Mr Wilford: l)o you mean that you can do it without any teaching? (Laughter.) When the Prime. Minister gave the- House tho figure of .£250,000 a year as the cost of the naval defence of this country by the cruiser Chatham it was absolutely absurd. (Hear, hear.) Mr Massey: It is the. opinion of the people who know.

Continuing Mr Wilford expressed the hope that the Prime Minister would set up before the end of tho session a Commiission to deal with the industrial insurance companies of this country He was quite suro that such a Commission would result .in much good, and that the Life Insurance Policy Act would bo altered. Ho urged that the Government should at once tako up in earnest the electrification of some of our railway lines, particularly the suburban lines. At the great hydro-elec-trio conference at Pasadena, which he had had the privilego of attending whilu in America, at was stated that already forty-five railway lines had been electrified in America, and tho president of tho conference ostima'bed that if they were all eleotrified, th© resulting saving in coal would be 122 million tons, or 50 yer cent, mor? than Britain's prewar export of coal. Dealing with tho question of the highways of the Dominion, ho suggested that the Countv Councils should bo empowered to soil highway bond* for the purpose of coining adcquatelv with tho main road 6 problem. (Apr>laU6o.)

Sneaking of sugar, M,r Wilfcrd asked if the Prime Minister would deny that before the war shareholders in tho Colonial Sugar Company reoeived 10 per cent, dividends with sugar at .815 a ton. The price of sugar before the war was (•■>•. 'on, nt the beginning of this year .£23, and to-day £47. In Fiji ana i'upe«te it took 81 tons of cane to make a ton of sugar. For this a planter got

HON. W. NOSW3RTHY REPLIES! SOME PURPLE PASSAGES. ' The Hon. W. Nosworthy (Minister for Agriculture) regretted, as ho was sure did all on his side of the House as well as on tho other, tho absence through illness of the Loader of tho Opposition. He denied that either the Budget or the Government was without vision. It was not correct, he said, that the Government had taken no steps to deal with the position that would arise when the shipping control was lifted. The Government had asked the shipping companies to meet the Stock Committee to go into the whole question of shipping and freights; and that committee was empowered to act. Since he bscaine Minister for Agriculture, too, he had taken steps to approach the shipping companies with a, view to opening up markets in South America for our ] apples and stock. So that the hon. member was wide of the mark when he said that the Government had no policy and had done nothing." Mir Wilford: Have you any agents there? Mr Nosworthy: Yes. Mr Massey; .Ther don't need .to be New Zealanders. Mr Wilford : I know that. . ■Dealing with the question of American markets for our meat, Mr Nosworthv stated that 90 per cent, of the freight cars in the United States fitted for carrying stock and meat" were in the hands of the meat trust, which our Government had been and was now so much against. The hon. member a argument on that head therefor© fell to the ground. _ „ Mr Wilford: Q.E.D. (Laughter.) Mr Nosworthy claimed that his argument had not Left the hon. gentleman a leg to stand on. (Laughter.) ■Mr Wilford: I suppose it is the best argument you have got. (Laughter.) A Reform member: It is true! (Laughter.) . . Behind 'every pound note in this country there was a golden sovereign, declared Mr Nosworthy, eo that tto■ honi. member's argument as to the inflation of tho currency was groundless. Mr Wilford: What is 'the purchasingpower of the sovereign? (Hear, hear.) As to a levy on wealth, the Commission set up by the British Government had reported against it. The finest bankers in Britain, and all the great financial men, were against it. Mr Wilford: They were bound to be. ( Mr g Nosworthy went on to refer to the compulsory loan clause. Mr Wilford: How much did it bring ID Mr Nosworthy: A big lot of the 56 millions subscribed in this country was raised bv compulsory loan. Mr Wilford: How much? Mr Nosworthy: You can look it up in the Budget. I am not going to waste mr time over it. (Laughter.) Mr R. McCallura. (Wairau): No; it isn't in tho Budget. If, stated tho Minister for Agriculture, the hon. member for Hutt had any sense of responsibility at all, ho would tot demand further taxation on large estates. Under the system of taxation obtaining to-day the land was paying 50 per cent, more than the pre-war revenue under land tax and paying income tax as well. Mr Wilford: What does.it produce? Tho hon. member for Hutt, proceeded the Minister, had stated very clearly the policy of the Liberal Party, which was more taxation on land, more taxation on large estates, more taxation on large incomes and through the death duties. He did not say that the incidence of taxation did not need to be revised. Such revision, in fact, was a plank in the Government platform at the general election. BREAKING- STRAIN NOT PAR OFF.

But, if the ion. gentleman was going to tell the people that they required more taxation and still more taxation, if that was his policy, then he could assure him that the breaking-strain was not far from being reached if the value of our produce fell in the overseas markets. Mr Wilford, he added, waa a long way from mark in regard to the sugar deal. Was he awaro that the Sugar Company Was an Australian company; and, whether they watered their capital orjnot, it was not for the Government of this country to tell an Australian company wnat it should do in regard to its capital. When the hon. member talked about getting our sugar cheaper from Cuba, he showed his ignorance of the conditions. He might tell the hon. member that when the Prim* Minister inquired recently ths Cuban manufacturers were quoting £SQ a ton for sugar. If the hon. <rentleman would have liked to see the people of this country without 6Ugar, then that was very likely to have happened on the lines he advocated.

Mr Wilford: Well, don't burst into tears. (Laughter.) Mr Nosworthy stated that measure* would be introduced, having for their object a more equitable distribution of taxation. In his opinion the whole incidence of taxation, the whole foundation, reqviired broadening and deepening so as to make a lot of people who paid no taxation pay their fair share. Mr Wilford: You want to get on to tho little people; I want to get on to the big fellow. (Hear, hear.) Mr Nosworthv said that our system of taxation should embrace all; and eachi however poor, should contribute his mite.

Mr Wilford: They are doing it through the Customs.

Mr Nosworthy said that the direct taxpayers paid Customs taxes as well as direct taxation; and a lot of revenue was derived from taxin,? people on their debts under the system introduced by the late Liberal Leader when Minister for Finance in the National Government. A very heavy burden it must be when they considered the amount of private mortgages in tho Dominion. Mr G. W. Forbes (Hurunui): You voted for that. (Hear, hear, and laughter.) The yield of tho land tax, added ' the Minister, had increased last year by .£■50.00!) and that of tho income tax by ,£150,000; and 'the yield of the land tax would .increase as the valuations were completed, always supposing that no chango wns made in. the present graduations. That ' the income tax revenue had increased so little, showed, ho contended, that we hod almost reached tho limits of tho .revenue-raising power of the tax. (Oh, oh !) Speaking for himsolf, he strongly favoured the totalisator tax; and ho would "ram the taxation on to the cheap amusements that camn to the all the time, instead of putting it on those who were struggling to pay income tax, etic. (Hear, bear and laughter.) Mr Goo. Witty (Riccarton): You would put it on the "Sleeping Beauty." (Laughter.) Referring to tho wliteat deoiH Mr Nosworthy claimed that the Govern-

ment hod saved a great deal of money to the country. Mr Witty claimed that the Hon. W. D. S. Mae Donald had made the best wheat deal for the country. Mr Wilford (to the Minister): Say that he saved the country J22")0,000 on wheat. He isn't here, and it would cheer him up to read it in the payers in the morning. BREAD AND BUTTER PRICE'S.

Referring to the subsidy given from the Consolidated Fund to the buttermanufacturers who supplied the local market, so as to v keep down the price of butter, Sir Ncsworthy said that he did not believe in that system. Whatever the cost of production and the market price of produce, let the people pay it; and if the r could not let them go without. Mr Witty: Starve your own people.' Mr Nosworthy said that he did not believe in the make-believe subsidy sys tern. If it cost 7s 6tl or 7s 8d to grow wheat in this country, it would have to be paid and 'the price of the loal should be based on that pi-ioa. Speaking for himself, ho eaid that .the only sound prinoiple for an exporting country which depended upon fits exports to pay its pensions and the interest on its Mr Witty: Are you advocating an export tax? . ' Higher prices for. produce, contended Mr Nosworthy, were reflected m the higher wages of the people who produced Tt, and in higher wages to the peopLe generally. ■ Mr Wilford: Are you advocating an export Us? (Laughter.; Mr Nosworthy: I am not, and you know it. (Loud laughter.) Whatever the' prtoes of produce the people ought to pay them, he maintained. Mr P. Fraser (Wellington Central): Do you believe in famine prices for n producing country? (Hear, hear.) Mr Nosworthv: From an examination of the figures it would thus be wen that a good proportion of New Zealand s charges were payable to people in New Zealaiad.

PAINTING NEW ZEALAND BLACK. There was a cry for money for hydroelectricity, 'but the Government would not be able to give all that„was requested. Tliev would have to so reasonably slow. It was impossible to meet the full <demands that were being made. Mr VYUford talked of want of vision, but *nat about want of money? The Government was determined to got everything i« could get, but get it by reasonable, honest means. There were persons trying to paint the country black m order to prevent people from corning here, and it had come to his notice that some people had sgone Home with that object Mr -Witty You ought to name them! The Minister: I might have to, Mr Frasei*: Provide homes tor them! The Minister: The honourable gentleman does not want people to cotne here to help to provide the homes! He thought the leader of the Labour Party and some of his colleagues who came to this country to benefit themselves, and did not want anyone" eise to benefit himself, should be put bag and bagtfage out of New Zealand. Mr Fraser: Poor baby! . Anything in the nature of disloyalty ghould be firmly put down. Ihe Liberal Party was shattered, but there were some elements on the Opposition side who would be welcome on the Government side to assist in fighting the section to which he had already alluded. This was a day in which reason ought to prevail. _ ~ , • , . Mr Holland: That would be a bad day for you! .... As to wheat, unless a. reasonable minimum price ware guaranteed, we would have to import wheat, and then wo would be at the mercy of the watersiders, who might declare cargoes black and leave us etranded for this most essential commodity, ANOTHER CANDID CRITIC THE DEBT AND THE NAVAL POLICY. Mr G. Forbes (Hurunui) said the general verdict throughout New Zealand was that the Budget had not mot the occasion. The wealth of New Zealand had largely increased of recent years, and the country was absolutely sound financially and able to bear a far bigger strain on its finances. We had a gross public debt of .£99,000,000 in 19H,. and now it I was .£201,090,000, or JCI6S 3s per head. The Budget should have considered whether wo should meet some of this tt the present time or push the whole of lit on to Rosterity. Something should be done at the present time.'and our sinking fund of one per cent, contrasted miserably with what was to be done in England. Our debt, was raised at a limo of inflated prices, and we should attempt tj pay it off at a time wben those i:i» flated prices could be taken advantage of. Instead of asking the country to ray something adequate in this, its time of prosperity, the Government made the futile suggestion of a one per cent, payment. Yet we were told that this was a Budget of which wo might bs proud. He was not proud of the Budget, nor were some of the followers of the Prinm Minister. Proposing to pay a debt by such a sinking fund was only camouflage, and in the past Mr Massey had condemned sinking funds. Mr Masse j should take his courage in both nands and ask the country to make a much greater contribution. Regarding the compulsory loan whicl was mentioned, there should be some thing known as to when it wa« coiuiiß and what the rate was to be. Business men ought to be allowed to prepare in advance for the loan. The stamp rfutj should be materially increased to assist ub in meeting our obligations, and there should bo a higher graduated land i»t. He said that the naval policy of th» country should nob be decided without the House having a say in the mattei. There was no subject the House couln give up more time to. The Houso had never had an opportunity of considering Lord Jellicoe's report. The first thing they knew was what was in the Budget. The subject was too important to bo dealt with bv a Government without reference to the House. He asked even now that an opportunity to discuss the Jellicoe report bo given. It was 0ft...!! said that this country was run by Cabinet without reference to the Houee,. but in this matter the House ought to assort itself. .. 'Mr J. P. Luko (Wellington North) moved the adjournment of the debate, and the House rose at 11 p.m. •